Financial
Jayne Clifford, of Martin Aitken Chartered Accountants, gives her top tips for managing your practice in the economic downturn
prepared Make sure you’re
T
hroughout the country, businesses are still feeling the effects of the recession and, unfortu- nately, dental practices
are now no different. As businesses, individuals and the Government are all re-assessing their priorities, this has started to impact on the dental sector within Scotland and the UK. The recent changes by the NHS
on the availability of grants for prac- tices and a tightening on what type of treatments they will pay for, will have an impact on dental practices.
Cash is king While it is always nice to see a healthy profit at the end of the year, there have been many profit- able businesses that have struggled over the past couple of years due to one key issue: managing their cash flow. As businesses start to struggle, it is not uncommon to try to retain cash, either through not paying for items, or expecting payment up front. Luckily, there are a number of ways that you can manage this process. Have regular contact with your
bank relationship manager. It is better to be up front with them if you anticipate any issues, as this will allow you, with them, to work out a plan. Possible areas to discuss with them would be taking a ‘Capital Holiday’ on any funding you have from them and only pay back the interest element for a period, or renegotiating the terms of this. Remember, your bank wants to be a business partner and trusted advisor and therefore early and frank discussions are essential. NHS income is fairly steady and is paid monthly. However, do famil-
iarise yourself with recent changes in what treatments the health board will pay for, as this may impact your income and discussing matters, such as rent reimbursement with your advisors. The level of income is not as
readily predictable for practices that have large private fees. You could, therefore, consider ways to make it easier for patients to afford their treatment. This may be possible, for example, by offering payment plans and by linking with companies prepared to fund such plans. As with banks, it is much easier
to negotiate with creditors up front and agree extended payment terms than when it is too late. It may be possible to agree that all invoices be paid within 60 days as opposed to 30 days. However, it is accepted that this is easier said than done.
Know your business Managing your cash flow is an essential part of knowing your busi- ness. However, it is also vital to be able to assess the profitability of your practice. The thought of management
accounts may be enough to send you to sleep. However, they are one of the best sources of information for you to monitor your practice. They allow you and your advisors to keep a close eye on the perfor- mance of the practice and therefore detect any issues sooner rather than later. Doing this will also allow your accountant to perform more effective tax planning exercises. Many practices set budgets and
forecasts on a monthly basis. What makes this process really effective is reviewing how the practice actu- ally performed against budget, and
“Managing your cash flow is an essential part of knowing your
business. However, it is also vital to be able to assess the profit- ability of your
practice” Jayne Clifford
the reasons for differences. This should allow you to identify where improvement can be achieved. Don’t be afraid to make difficult decisions. In this climate, one of the hardest decisions can be around staffing. It is better to be up front with your employees and by doing this it may be possible to agree short term and temporary changes to terms (e.g. four day weeks, reduced associate percentages). These can avoid redundancies, or worse, in the long run. Are you ready for changes in
legislation, such as auto enrolment for pensions and RTI for payroll?
Know your patients The simplest way to ensure your business survives is to fully under- stand the needs and demands of your patients. Sounds simple doesn’t it? But, as human beings, everyone is unique. Speak to staff and patients to consider areas such as: • if a large number of your patients work, offering evening sessions • making appointments more family-orientated with the possi- bility of family bookings • making the patients more aware of services out with the normal areas, such as teeth whitening. While many of these ideas may
seem obvious, we at Martin Aitken & Co would always recommend that you do the above with the advice of your advisors. Early action may make the
difference between growing your business and stagnating.
® Jayne can be contacted at jfc@maco.
co.uk by calling 0141 272 0000 or by visiting
www.maco.co.uk
Scottish Dental magazine 49
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